The principal measures in Budget 2012 are listed below (see separate note and blog entry for a Budget Commentary).
- In macro terms, the deficit will fall to 8.6% of GDP, or €19bn, from this year's level of 10.1% of GDP.
- To put that deficit of 8.6% of GDP in context, the UK’s equivalent number for 2012 will be 7.8%, Germany’s will be 1.0% and the eurozone average will be 4.3% (using European Commission forecasts).
- The overall austerity package of €3.8bn is split between expenditure cuts (60% of the total), and tax increases (40%), and is about 60% the size of the package in the 2011 Budget.
- Total spending will be €55.8bn compared with an estimated €57.7bn this year, a fall of 3.3%.
- Total revenue will be €38.3bn compared with an estimated €37bn this year, a rise of 4%.
- The standard and higher rates of income tax, personal tax credits and the standard rate tax band are all unchanged.
- The Universal Social Contribution (USC) will not be payable at all on the first €10,036 of income, up from €4004. Next year it will be collected on a cumulative basis, which will essentially fund the higher exemption threshold.
- The first 36 days of illness benefit will no longer be tax free.
- Mortgage interest relief will be increased to 30% for first time buyers of homes that bought between 2004 and 2008. It will be increased to 25% for all NEW buyers in 2012, before falling back after that.
- A new "Special Assignee Relief Programme" is being introduced to facilitate multinationals and indigenous companies to attract key staff to Ireland, and a new Foreign Earnings Deduction is being introduced to support exports by giving a special tax relief to any employee who spends at least 60 days a year developing markets in Brazil, Russia, India or China.
- A surcharge of 5% will be applied to individuals with gross incomes of more than €100,000, to be charged on the amount of income sheltered by property tax reliefs.
- Stamp duty on all non-residential property is being cut to 2% from today.
- The rate of Capital Acquistion Tax is being raised to 30% from 25%, and the tax free threshold is being reduced substantially.
- The rate of Capital Gains Tax is being increased from 25% to 30%, but any property bought from tomorrow until the end of 2012, and then held for seven years, will be exempt from CGT.
- The standard rate of VAT, as previously announced, is to rise by 2% to 23%.
- PRSI will be applied to unearned income such as rental income and investment income. Employer PRSI relief on pension contributions will be abolished (it was halved last year).
- The rate of DIRT is to rise from 27% to 30% for most deposit accounts, as will the exit tax for insurance policies and investment funds.The rate will be 33% for payments made annually or more frequently. This will take effect from January 1st 2012.
- Motor tax will be increased, particularly for lower-emission vehicles.
- The Carbon tax will be raised from €15 per tonne to €20.
- A household charge of €100 per house will be introduced.A full property tax will be introduced in 2014.
- Taxes on cigarettes will rise by 25% per packet of 20.
- Betting duty will be applied to remote betting, from Q2 1012.
- Start-up company relief is being extended until 2014.
- The first €100,000 of R&D spend will benefit from the 25% R&D tax credit. Some of that credit can be used to reward R&D employees.
- The annual imputed distribution from Approved Retirement Funds (ARFs) will rise to 6% from 5% for ARFs of more than €2m. This essentially means that if the owner of the ARF does not take at least 6% out of the ARF each year, he/she will pay the balance in tax anyway.The same will apply to "vested" PRSAs.
- Of the €2.2bn in spending cuts, about €800m will be in capital spending cuts, already announced (e.g. the indefinite postponement of Metro West).
- Current spending will be cut by €1.4bn, or about 2.7%.
- The public sector pay bill will fall by €400m.
- Staff numbers in the public sector will be below 300,000 by the end of this year, and a further reduction of 6,000 is expected next year.
- Public sector sick pay will be “overhauled”, and public bodies will be expected to cut their overtime bill by 10%.
- There will be total savings of €475m on social welfare. All weekly social welfare payments are unchanged. Child benefit will be standardised (no extra payments for third and additional children) over two years €43m. Unemployment payments will be calculated on the basis of a five day week, rather than the current six day week basis.
- The employer rebate on redundancy and insolvency payments will fall from 60% to 15%, saving €81m.
- There will be minor changes to the lone parent allowance (saving of €21m), rent supplement (€55m) and some other lower-profile allowances and benefits.
- In health, there will be savings of €543m. These savings will come from better procurement, a higher monthly threshold under the Drugs Payment Scheme, lower drugs prices, and a variety of other measures.
- In education, there will be savings of €132m, from higher student registration charges of €250 per year, reductions in the career guidance service, and other minor items.
- In smaller spending departments, there will be cuts of €105m in Agriculture, €17m in Children and Youth Affairs, €17m in Defence, €34m in Environment, €55m in Foreign Affairs (of which €53m in Foreign Aid), €5m in Jobs & Enterprise, €100m in Justice, €45m in Transport, and €19m elsewhere.